PRESIDENT BUSH: There will be two opening statements, and then we'll take two questions per side. Thank you for coming.

Silvio, it's great to welcome you back to our country. I think it's fitting that one of the first world leaders to have visited after our elections is my friend, Silvio Berlusconi. He is a close personal friend. He is a friend of the United States of America. I told the Prime Minister I look forward to working with him over the next four years to make the world a better place for all. And I've got work to do in Europe, and he gave me some very good advice about my upcoming trip. But he always gives me good advice. And I'm proud to have his advice.

We talked about peace between Israel and the Palestinian Authority. I think there's a very good chance that we can achieve that peace. I look forward to working toward that end. The Prime Minister had good advice on that subject, as well.

He expressed his concerns about the relationship between the dollar and the euro. I told him we're going to take this issue on seriously with the Congress. The best thing that we can do from the executive branch of government in America is to work with Congress to deal with our deficits. One deficit is a short-term budget deficit. Another deficit is the unfunded liabilities that come with Social Security and some of the health programs for the elderly. I told the Prime Minister that Social Security reform will be at the top of my agenda. I campaigned on the issue. I look forward to working with members of Congress to resolve this long-term, unfunded issue, so that the world financiers can take comfort in the fact that this government will address one part of the budget deficit. There's a trade deficit. That's easy to resolve; people can buy more United States products if they're worried about the trade deficit.

But we've had a good visit. And I'm proud my friend is here.

And finally, we discussed our mutual desire to spread freedom and peace. I want to thank the Prime Minister for his understanding about the need for the free world to succeed in Afghanistan and Iraq. He's the kind of man, when he gives you his word, he keeps his word, which is the sign of an impressive, strong leader.

So thank you for coming.

PRIME MINISTER BERLUSCONI: Thank you, Mr. President, for your kind words. Thank you for the friendship you showed to me, to my government, and my country.

And my behavior and the behavior of my government is based on the fact that we share the same values. We appreciate strongly the fact that America has taken on the responsibility of defending and spreading peace and democracy all over the world. And we appreciate the fact the United States do that with sacrifices and a lot of suffering. So we fully share the work carried out by the American administration. And the political agenda, the program which has been announced for the next four years, is something we fully agree on.

We share the same opinion as to the need of reforming the United Nations in order to make it an institution which will be able to tackle the problems affecting this century, and the multilateralism which has to take into account results to be achieved, and complete facts. We agree on the fact that we have to continue to fight the war on terror together. And we agreed on the fact that it is now the appropriate time to solve the Middle East issue.

And in particular, I agree on the way in which we keep on and carry on our relationship. It's a very frank, direct, straightforward and spontaneous way, full of truth. And I think this was the deepest reason why President Bush succeeded so much, especially, with the Americans. It is not politics. There is no politics which makes people say things which people do not believe in or think. President Bush tells me and all of the others always what's in his mind. And it is very positive that "yes" means really "yes" to him, and "no" means "no." And I want to reassure President Bush that we'll do any possible accord to strengthen the relationship between the United States of America and Europe. Because I agree with him, the West is only one.

PRESIDENT BUSH: Welcome. Anybody representing AP here? Oh, you are.

Q Iraq's Defense Minister says that Iran and Syrian intelligence agents are supporting al Zarqawi and that Iran is trying to sway the January 30 elections. Do you believe these charges are accurate, sir? And is there anything the United States can do besides simply telling Iran and Syria to refrain?

PRESIDENT BUSH: We have made it very clear to the countries in the neighborhood, including the two you mentioned, that we expect there to be help in establishing a society in which people are able to elect their leaders; and that we expect people to work with the Iraqi interim government to enforce border, to stop the flow of people and money that aim to help these terrorists. We made that very clear. And we'll continue to make it clear.

We have made it clear that, for the good of the area, that there ought to be a peaceful country where the different religions can come together under the TAL which has been passed, the go-by for what a new constitution should look like. And we will continue to make it clear to both Syria and Iran that -- as will other nations in our coalition, including our friend, the Italians, that meddling in the internal affairs of Iraq is not in their interest.

You want to call on somebody from the Italian press?

(President Bush's remarks translated into Italian.)

THE PRESIDENT: I'll be more polite to the translator from now on. (Laughter.) Want to call on somebody from the --

Q You said you've discussed the euro-dollar ratio, and, therefore, you discussed your relations between the two economic blocs. Can you say something more in detail about what you talked about, and if there is, in the future, the possibility of a better balance between the euro and the dollar in terms of the exchange rate?

PRESIDENT BUSH: The policy of my government is a strong dollar policy.

ITALIAN TRANSLATOR: I'm sorry, I didn't hear -- (laughter.)

PRESIDENT BUSH: She might not agree with it. (Laughter.) We believe that the markets should make the decision about the relationship between the dollar and the euro. Therefore, to the extent that the federal government is involved with strengthening -- making the conditions such that a strong dollar will emerge, we'll do everything we can in the upcoming legislative session to send a signal to the markets that we'll deal with our deficit, which, hopefully, will cause people to want to buy dollars.

Independently, the Federal Reserve, under the leadership of Alan Greenspan, raised the interest rates yet again, a signal to the world markets that the Chairman is also aware of the relative currency valuations between the euro and the dollar. I'm not that generous yet.

We love April, but there's a limited number of questions.

Holland.

Q Sir, you're going to this conference today. Some Democrats call the private accounts in Social Security a risky scheme. What happens if people lose money on their investments? Does the government bail them out?

PRESIDENT BUSH: Look, Steve, this is the issue about addressing the long-term liability issue. This is a Social Security issue. Like many nations in Europe, there's an issue with Social Security systems. Baby boomers are getting ready to retire and there's not enough workers to sustain that which -- that which has been promised. So the fundamental question I placed before the Congress is, we have a problem, let's work together to deal with it.

I believe there's a consensus beginning to grow that members of both political parties understand now is the time to address this problem. I believe one way to help make sure the system meets the needs of a younger generation is to allow younger workers to take some of their own taxes and invest in a personal savings account -- under certain conditions. The people in our country have heard this notion, so-called "risky scheme" adjectives in the 2000 campaign and the 2004 campaign. I took the message to them. They realize, like I realize, now is the time to deal with the problem. And I look forward to working with both members -- members of both parties to solve this problem.

But let me just give you one -- this is a chance now to kind of start laying the groundwork for future questions. The great desire for people in Congress is for me to negotiate with myself. You notice I said the great desire for members of Congress, not members of the press. And therefore, I will continue to articulate principles that I think are important and reach out to members of both parties to fashion a plan that solves the problem.

PRIME MINISTER BERLUSCONI: The problem of Social Security is common to all of the Western world. And this is, luckily, due to the fact that we live longer because of the better standard of living and because of the discoveries made by medicine. In Europe, all governments are dealing with reforming Social Security systems, but one thing is for sure, that it needs to be done. That is, we have to extend the working life of the people.

I'm one of the strongest believers in that, because at my age, I'm convinced that one -- at my age you can keep on working pretty well. (Laughter.) And you can tap on the experience you kind of piled up over your working life.

PRIME MINISTER BERLUSCONI: I want to say something -- we have already reformed our Social Security system in Italy. And this is one of the 24 reforms through which we are modernizing our country. And I've just said to President Bush that at the end of its term, my government will have completed many more reforms than all of the previous governments in the Italian republic.

PRESIDENT BUSH: Very good.

A final question from the Italian press?

Q Did you debate the possibility that the President of the United States will soon fly on Italian helicopters? (Laughter.)

PRESIDENT BUSH: With U.S. parts. I've got the message, yes. (Laughter.)

PRIME MINISTER BERLUSCONI: I can only say that I've been flying these helicopters for 30 years, and I'm still here.

PRESIDENT BUSH: And you never crashed. (Laughter.) That's a good start. (Laughter.)

The Prime Minister brought up the issue. I'm very familiar with it. As you know, we delayed a decision until later on in the spring. I'm very aware of the joint venture. I understand the nature of U.S. jobs that will be created in this venture, and I assured him the venture will be treated fairly.